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Netflix offers streaming movies to subscribers

Netflix subscribers will soon get access to movies delivered over the Internet, finally allowing the company to live up to its name. For those with the bandwidth, this is a nice (and free) extra, but users with slow connections will want to stick with DVDs.

The new service streams movies to Windows PCs instead of downloading them first. This has the dual benefit of 1) appeasing content owners who worry that full downloads of their movies might be cracked and 2) providing instant gratification to customers in need of a cinematic fix. Netflix claims that, with the aid of a one-time browser applet download, customers can begin watching films within 15 seconds of clicking the "play" button.

Streaming high-quality video with little buffering requires a fast connection. Netflix says that its new technology throttles the streaming speed based on available bandwidth. Users will need a minimum of 1Mbps to watch films, but these will be far below DVD quality. 3Mbps connections are required to watch movies in their native resolution (no support is currently planned for high-definition content). With the increasing ubiquity of broadband, this should pose no problem for most power users, but plenty of 768Kbps DSL connections (and slower) still dot the landscape.

The new service will be rolled out gradually but should be available to all Netflix subscribers by July. The amount of video that can be watched on the PC varies depending on the subscription plan. Users with the $5.99 plan will get six hours of online viewing each month, while those with the more common $17.99 plans get 18 hours. The decision to offer this in terms of "hours" rather than "movies" could potentially frustrate customers who don't want to wait until next month to see the second half of Casino Royale, but it does allow for stopping, starting, and switching films without developing some convoluted definition of what it means to "watch a film."

The initial selection is fairly thin, with only 1,000 titles available (out of more than 70,000 available on DVD), but this was the same number of DVDs that Netflix launched with back in 1999. It's probably just as well; Netflix has made clear that they want to roll out the new technology slowly to make sure that everything works correctly. As CEO Reed Hastings notes, this isn't a market that is going to pay big dividends for a few years yet.

"While mainstream consumer adoption of online movie watching will take a number of years due to content and technology hurdles, the time is right for Netflix to take the first step," he said. "Over the coming years we'll expand our selection of films, and we'll work to get to every Internet-connected screen, from cell phones to PCs to plasma screens."

The move does help Netflix in the short-term, though, by giving them a new selling point in their war with rival Blockbuster. Blockbuster has been aggressively advertising its DVD-by-mail service on TV and touts its Total Access program as a major advantage over Netflix.

With Blockbuster's plan, though, users still need to drive to a local video store to collect a new film; with Netflix, it can all be done at the PC. Of course, these movies still need to be watched on the computer, but it's clearly in Netflix's interest to develop an online distribution channel that reaches all the way to the television.